SEC FinTech Forum: New Tools For Investment, Capital Formation, and Record Keeping

On November 14, the SEC held its first FinTech Forum to discuss the current state of the industry and how the SEC plans to help both foster and regulate it.

The forum kicked off with comments from Chair Mary Jo White, who has since stated her plans to resign at the end of President Obama’s term. She discussed the emergence of FinTech and how the SEC planned to play a larger role as consumer protection is part of their mandate. The forum had four panels, which discussed the marketplace lending space, distributed ledger technology, digital/robo-advisers, Regulation Crowdfunding, and investor protection in this new and changing field.

The overarching theme was increased integration between people and technology: robo-advisers will simply become part of giving investment advice; distributed ledger technology will replace the back office workers at many institutions, likely starting with exchanges and clearing and settlement organizations. Smart contracts will execute on their own rather than requiring a person to determine when a set requirement has been met. In addition, people will use the internet to raise capital from a larger pool of potential investors – both through debt and equity financing. Discussion of drafting and enforcing regulations that will foster innovation while ensuring consumer protection was front and centre and both industry participants and the SEC noted that much of this technology allows for increased transparency, which would provide examiners a clear roadmap of the product, service, or transaction at issue.

Most of the discussion focused on products and services that are still in their relative infancy, but the future looked bright and the SEC is planning to be open, involved, and informed each step of the way.